20 posts from August 2013

Tax-related identity theft is a multi-billion dollar business that may be affecting you and your clients. Identity theft is the fastest growing crime in the world. It can affect your credit and tax records and your earnings record—a criminal record may even be established in your name. No one is immune.

Identity theft that affects your credit record has been around for decades; however in the past 10 years, tax-related identity theft has seen an explosive rise. The statistics are staggering. A report from the Treasury Inspector General for Tax Administration indicated that during the 2011 filing season, 1.5 million fraudulent returns went undetected and refunds totaling $5.2 billion were issued to the wrong person.

In view of the changes brought about by the American Taxpayer Relief Act of 2012, estate planning has taken on a new complexion. With the portability rules and the applicable estate tax exclusion of $5,250,000 (indexed for inflation) being made permanent, ATRA has not taken away the need for estate planning; rather, it has changed what CPAs now need to plan for. Most CPAs working in the area of estate planning are shifting focus to asset protection, enhanced generational transfers and portability.

AICPA President and CEO Barry Melancon, CPA, CGMA, stated this video to AICPA members that the primary purpose of estate planning is to financially protect and provide for loved ones. This same sentiment was echoed by Jean-Luc Bourdon in a previous blog post, Tax Planning Complexity Can Provide Growth for Your Firm. The message is clear: CPAs need to shift from estate tax planning to estate planning.

These non-authoritative audit data standards present
a new way of optimizing efficiency and effectiveness in reporting and assurance
by facilitating automation and enhancements in the analysis of business
information. In addition, audit data standards identify the key information
needed for audits and provide a common framework covering:

data file definitions and technical
specifications;

data field definitions and technical
specifications; and

supplemental questions and data validation
routines to help users better understand the data and assess its completeness
and integrity.

Who will
benefit from their use? A number of stakeholders, from internal and external
auditors to software vendors. Let’s discuss.

I continue to get requests from members on how to handle the "comfort letter" issue, as well as feedback on guidance the AICPA has developed and suggestions for how we can better advocate for our members and their clients. By way of background for those of you who may have missed my previous blog post, CPAs are often asked to verify a variety of client information for regulators, banks, insurance providers, state taxing authorities and more.

What they're asking for, basically, is a guarantee that certain information about a client is correct, such as confirmation of a client’s self-employment status; verification of income from self-employment; verification of a self-employed borrower’s business ownership percentage; and profitability or sustainability of a self-employed client’s business. While it's certainly understandable why they would want verification of this information, depending on what the request is can place CPAs in a risky situation. At the AICPA, we’ve received several inquiries from members regarding what is often referred to as "providing comfort" or “comfort letters.” However, the requests are actually “third-party verifications."

A recent AccountingWEB article by Deanna White highlighted the
steps the AICPA is taking to develop more female leaders in the accounting
profession.

"If you look at people coming up in
the ranks over the last thirty years, 50 percent of the people in the
profession are women but only 19 percent of leadership in the accounting and
finance professions right now is female," says Mary L. Bennett, chair of
the AICPA Women's
Initiatives Executive Committee and founder of MLBennett Consulting LLC.

Bennett said
that there is a perception that more female leadership in the accounting
profession is an issue that will take care of itself - but that's not the case.

There’s nothing like a personal financial incentive to challenge undergraduate students across the country to test their personal financial planning skills. The American Institute of CPA’s fourth annual AICPA Accounting Competition opened earlier this week, with teams competing for a $10,000 top award and second and third place prizes of $5,000 and $2,500, respectively.

The competition underscores the important role CPAs serve as financial planners at a time when young adults are dealing with crippling student loan debt and maxed out credit cards.

I spoke with Erin Curtis, AICPA manager, College Student Recruitment & Engagement, to find out some inside information about this year’s competition and what CPAs can do to help spread the word about the great opportunities a career in accounting provides.

Mergers and acquisitions and the many issues associated with turning a practice over to new owners are hot topics right now. According to the 2013 PCPS CPA Firm Top Issues Survey, succession planning was a concern for firms of all sizes. Practitioners are aware that a proper transition of clients and staff is crucial, but it’s also important to address questions about potential outstanding liabilities.

How are past claims against a practice handled when one firm is sold or merged into another? I recently received a call from a practitioner asking just that question. She was the sole owner of a three-person firm who was selling to her two employees. She was quite concerned that uncertainties about possible past liabilities might stand in the way of the sale.

In this podcast, Ted Sarenski discusses the latest developments regarding health care reform and the Affordable Care Act, including what will be required of health plans offered both through exchanges and employers, the delay to 2015 of the requirement for large employers to offer health insurance, the individual mandate, penalties and federal subsidies, the October 1 deadline for health insurance exchanges, preexisting conditions, and Ted’s predictions and advice for clients in 2014.

Ted Sarenski, CPA/PFS, President, Blue Ocean Strategic Capital, LLC. Based in Syracuse, New York, Ted has gotten a taste for providing PFP services in a larger CPA firm and on his own. He provides financial planning services and manages assets. His compensation model is a mix of hourly, retainer and assets under management fees.

In July, 2013, I left public accounting and joined the AICPA
as program manager for the Forensic and Valuation Services Section. As part of
my introduction, the AICPA sent me back to school. I attended the National
Business Valuation School from July 15 to 19 in New York. BV School is an
intense five-day training program focused on theories, applications, best
practices and controversies in business valuations.

For some of my 24 classmates, BV School was their first exposure
to valuation education. For others like me, the course was a great
comprehensive refresher on the complete Accredited in Business Valuation Body
of Knowledge. Some were already practicing in the valuation area and took
the course in preparation for the ABV exam. The Roadmap
to the ABV Credential recommends BV School as one of several choices for
valuation-related education.

SlideShare is a slide deck hosting service that is gaining a lot of ground (and traffic) in the Web 2.0 space. Sometimes referred to as “the YouTube for slideshows,” SlideShare is a valuable source of information on just about everything.

Using SlideShare to find something.

If you are a visual person like I am, you may learn information much easier when it is presented in the format of simple slides with images than you would by reading an article or whitepaper. From XBRL to using social media for business, SlideShare has a vast array of content valuable to CPAs.

How do you find the content? Simply go to SlideShare and enter your search term.

You can also follow users or presenters to see any content he or she uploads regardless of topic.

During the three decades of my academic career, many
industries have been transformed by the phenomenal changes in technology and
globalization. But in my industry– higher education – there have been mainly
beneficial effects of technology and globalization, with no major disruption to
the basics of academic life. The way I spent my first days as a rookie
Assistant Professor at the University of Southern California is remarkably
similar to the life I am leading now as a chaired full professor at the
University of Arkansas’ Walton College of Business.

In the U.S., 12.3% of the population is identified
as a nascent entrepreneur or owner of a business less than three years old.
That is roughly 22 million people between the ages of 18-64. The number is even
higher if you factor in the growing number of people who think about owning a
business or work inside an organization. And who wouldn’t want to be an
entrepreneur? They’re passionate, resilient, decisive and fearless. And because
of these personality traits, they are often more innovative than their
corporate counterparts.

Wouldn’t it be great if you could harness those personality
traits in your own organization?

In this final session I will be covering from the AICPA's E.D.G.E. Conference in Austin, Texas, Donna W. Salter, Senior Manager, Young Member Initiatives, AICPA, moderates a panel of young CPAs. Learn how some very involved, young CPAs use their talents and skills to help impact the profession on the state and national level. By investing their time, these professionals have ultimately created a win-win situation—the profession addresses the leadership pipeline issues by training these young CPAs as volunteers, and they, in turn, get tons of leadership experience, mentoring, and professional development. Panelists include:

I’m writing this blog post from the AICPA’s E.D.G.E
Conference in Austin, Texas. E.D.G.E. is an opportunity for CPAs to gain management and leadership skills, while networking
with leaders of the profession and discussing emerging issues. And since the
conference is aimed at CPAs and practitioners with 5-15 years of experience,
I’ve had an opportunity to speak to a number of younger AICPA members about the
opportunities and challenges they’ve faced in their careers. My colleague and
friend Heather O’Connor has posted a couple of great live blogs from
the conference and there are a lot of
tweets on the #AICPA_EDGE hashtag you can
check out to get a better sense of the content in the sessions.

Conferences are a great place to meet
likeminded CPAs, learn about the issues facing the profession and help navigate
the next steps in one’s career. Can’t make it to a conference this year? No
worries, the AICPA has announced the launch of the Young CPA Network Community to
help young CPAs enjoy many of the benefits of conference attendance from the
comfort of their laptop or mobile device – like networking and career
development.

Private company financial reporting has evolved more in the
past year or so than during the previous four decades. In June the AICPA issued
an accounting framework for smaller, owner-managed businesses that do not need
financial statements based on U.S. generally accepted accounting principles, and the Financial Accounting
Foundation’s Private Company Council has proposed alternatives within GAAP for
private entities. Both the framework and the PCC have the same goal of improving
financial reporting for private companies and both are critically important, as
private companies represent the vast majority of the businesses comprising America’s
non-governmental economy.

Many owner-managed companies are small or micro in size.
They often are called Main Street businesses, mom-and-pop shops or suburbia’s
business districts. The AICPA’s Financial
Reporting Framework for Small- and Medium-Sized Entities was designed to
serve this segment. The FRF for SMEs framework presents the small business
community with an opportunity for robust and relevant financial statements that
are simplified and cost efficient when U.S. GAAP is not required as a basis of
accounting.

This week I am live blogging from the AICPA's E.D.G.E. Conference being held in Austin, Texas today through Friday. The first session I am covering is "The Top Seven Issues Facing Young Professionals." In this session, Tom Hood, CPA.CITP, CGMA, CEO, Maryland Association of CPAs, will share the latest research on the issues that are top of mind for the young CPA professional, and share tips and techniques to deal with them. These issues include:

After recently being reintroduced to the reality of my student loans and how slowly I was chipping away at them—oy, the interest—I came to the conclusion that it was time for a budget revamp. I sat down, mapped everything out and determined the only solution was to relive my college days and go on the all Ramen noodle diet. While I usually pride myself on being a “frugal foodie,” the thought of hot noodles during the hot summer was not appealing, no matter how many variations I could make. Luckily, I travelled down to Philadelphia the following weekend and was reintroduced to the beauty of fresh farmers’ stand produce through a visit to the Italian market.

The online world operates 24 hours a day, seven days a week. It never closes. Our society has become accustomed, even dependent, on this real-time environment at its fingertips. We read the news online, buy everything from clothes to home goods to work-out DVDs online, pay our bills online, even look for a potential mate online. And we do all of these things whenever we want, and anywhere we want - as long as there is Wi-Fi!

But, soon, there will be something that you as a tax practitioner will no longer be able to do online: communicate with the IRS in certain circumstances. The IRS announced on its website that as of August 11, it would no longer offer the Disclosure Authorization and Electronic Account Resolution products online due to low usage. This news caused an outcry from the tax practitioner community; many signed petitions to keep them up and running. We received a flood of emails and phone calls from our members, rightfully concerned about the negative impact that losing these two products will have on their practice.

The increased complexity of individual taxation and the overall personal finance environment is leading many CPA firms to explore ways to address areas where tax planning overlaps with retirement planning, estate planning and other personal finance areas. This approach delivers great value, creates new firm revenues and increases competitiveness.

As Barry Melancon, AICPA president and CEO recently noted in a video to AICPA members, the need for tax planning that integrates personal finance concerns is critical. Clients have many questions about how the American Taxpayer Relief Act of 2012 and the new Medicare surtax affect them, in particular. The retirement savings crisis is getting national media attention and threatens the financial security of Americans. Post-ATRA, the estate tax may affect only a small number of clients, lessening the focus on planning to reduce taxes and refocusing estate planning on its primary purpose, which is protecting loved ones through asset protection, asset titling, beneficiary designations and more.